Tuesday, 28 February 2017

CBN PUMPS ADDITIONAL $180M INTO THE MARKET

The
Central Bank of Nigeria (CBN) yesterday released additional $180 million to the
forex market to further ease business transactions in the country.

The
intervention was done in two phases – an $80 million offer for Personal Travel
Allowance (PTA), school fees and medicals at the inter-bank market and $100
million Wholesale Forwards Market sell, which by the new policy, is reduced to
maximum of 60-day tenor.

The CBN
Acting Director of Corporate Communications Department, Isaac Okorafor, said that
the latest moves were part of the bank’s pledge and determination to increase
liquidity in the foreign exchange market.

“In keeping with its determination
to increase liquidity in the foreign exchange market, the Central Bank of
Nigeria (CBN) has released another $100 million into the wholesale forwards
segment of the market and pumped an additional $80 million into the banks
specifically for the settlement of dollar demand for school fees, medicals and
Personal Travel Allowance (PTA), among others.

“The commitment to providing enough
forex for legitimate business remains unshaken and we will do everything
possible to ensure the steady supply of forex to the market,” he said.

Only last week, the apex bank had
pumped $500 million into the market, which impacted positively on the value of
the naira against major currencies of the world, particularly the United States
dollar, which fell against the naira from N520 to N466 to $1.

The efforts by the CBN in making
available large amount of forex to the market has led to the appreciation of
the naira by over N85 in less than one week. There are fears in the market that
the local currency may well be on a permanent journey to its natural value put
by some analysts at less than N300 to the dollar.

The CBN had maintained that much of
the dollar demand had been a bubble created by speculators and hoarders of the
greenback. On a radio programme yesterday, the apex bank had warned market
players and keepers of dollars to make hay and sell their holdings to avoid
heavy losses.

Meanwhile, analysts, although
raising fears of sustainability of the market intervention, have admitted that
the new policy direction is gradually bringing sanity into the forex market, as
well as strengthening naira’s value.